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Air Canada Lowers Q3 Forecast and 2025 Outlook Amid Strike Impact

Air Canada Lowers Q3 Forecast and 2025 Outlook Amid Strike Impact
Financial Impact of the Cabin-Crew Strike
Air Canada has significantly reduced its financial forecasts for the third quarter and the full year 2025, attributing the revisions primarily to the effects of a four-day national cabin-crew strike in August—its first in decades. The strike resulted in over 3,200 flight cancellations, severely disrupting operations and leading the airline to project third-quarter operating income between CA$250 million and CA$300 million. Adjusted EBITDA is now expected to range from CA$950 million to CA$1.0 billion, both figures markedly lower than the previous year’s third-quarter results, which saw operating income of CA$1.04 billion and adjusted EBITDA of CA$1.523 billion.
The financial toll of the strike is estimated at CA$375 million, driven mainly by a CA$430 million revenue shortfall. This loss was partially offset by CA$145 million in avoided costs, primarily fuel savings, but also included approximately CA$90 million in additional customer reimbursements and labor-related expenses. Air Canada anticipates a 2% year-over-year decline in operated capacity for the quarter.
Management has indicated that claims processing for affected customers is ongoing, while wage negotiations with cabin crew have moved to arbitration. This step is expected to prevent further operational disruptions in the near term.
Revised 2025 Guidance and Market Challenges
In light of the strike’s aftermath and softer bookings following the disruption, Air Canada has revised its 2025 guidance downward. The airline now forecasts adjusted EBITDA between CA$2.9 billion and CA$3.1 billion, a reduction from the previous estimate of CA$3.2 billion to CA$3.6 billion. Projected available seat mile capacity growth has been adjusted to 0.5–1.5%, down from the earlier range of 1–3%. Adjusted cost per available seat mile (CASM) is expected to be between 14.60 and 14.70 cents. Free cash flow guidance has also narrowed to a range of minus CA$50 million to plus CA$150 million, compared with the prior breakeven range of plus or minus CA$200 million. Additionally, the airline plans to record approximately CA$175 million in one-time non-cash pension and other labor-related charges in the third quarter, which will be excluded from adjusted results.
The lowered outlook arrives as Air Canada faces potential challenges in maintaining market share and profitability. Competitors may respond with price adjustments or enhanced services to attract customers affected by the recent disruptions. The airline’s stock price experienced a temporary decline following the announcement, with the long-term impact contingent on the resolution of ongoing labor disputes and broader economic conditions.
Operational Stability and Industry Context
Although Air Canada’s operations have stabilized since the strike, demand remained subdued into September as travelers responded cautiously to the disruption. The company’s revised guidance highlights the lingering effects of the strike and signals a more cautious outlook for the remainder of the year.
While the technology sector is projected to post earnings growth in the third quarter of 2025, this trend is unlikely to have a direct impact on Air Canada. However, a stabilizing economy could eventually support a recovery in air travel demand, providing some relief to the airline industry as a whole.

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